WASHINGTON – Two legislators are urging Puerto Rico’s oversight board to focus more on economic growth than austerity and to freeze debt service payments for five years as the commonwealth begins its large scale restructuring process.

Reps. Nydia Velázquez and José Serrano, both Democrats from New York, made their requests in a letter to oversight board chair José Carrión on Thursday. The austerity measures the two representatives refer to in the letter are contained in Puerto Rico Gov. Ricardo Rosselló’s fiscal plan, which the oversight board approved in March. Puerto Rico is currently dealing with roughly $70 billion in debt and $50 billion in unfunded pension liabilities.

Rep. Nydia Velázquez, D-N.Y.
Rep. Nydia Velázquez, D-N.Y.
Rep. Nydia Velázquez, D-N.Y., co-authored a letter to Puerto Rico's oversight board on Thursday asking the members to leave behind austerity and focus on economic growth initiatives. Bloomberg News

“We are pleased that last week the Financial Oversight Management Board for Puerto Rico took advantage of the powerful court-supervised restructuring too provided by the Puerto Rico Oversight Management and Economic Stability Act of 2016,” they wrote. “The board should seize this as an opportunity to revise the fiscal plan in a manner that would ease the burden on working families and students, while also prioritizing economic growth.”

The two legislators argued to the board that “it is only fair that after decades of succumbing to unsustainable debt agreements, Puerto Rico refrain from paying debt service for the next five years, or until the economy has returned to growth.”

They also pressed the board to assure the people of Puerto Rico that the debt adjustments under PROMESA “will not be tarnished by creditor influence and that any liquidity influx will not be deviated toward the debt service.”

The currently planned austerity measures to free up funds for debt and other payments shows the oversight board “has gone too far,” Velázquez and Serrano wrote. They specifically cited the $450 million reduction to the University of Puerto Rico system and the 10-year, $6.1 billion cut in health care spending as examples. They called the cuts to the university “counterproductive” to economic growth and said the health care cuts are “excessively harsh” to the 40% of the Puerto Rico population that relies on Medicaid. The representatives also said that a 10% cut to pensioners within the fiscal plan is “another severe blow.”

Encouraging economic growth is “not only the right thing to do,” they said, but is also a path that will be beneficial for all stakeholders, including pensioners, public servants, students, and creditors.

“We hope that you will embrace the tools and policies that will lay the foundation for a long and sustainable economic recovery,” Velázquez and Serrano wrote. “Any actions that favor creditors will only serve to undermine this recovery while also escalating social tensions and pushing people to leave the island.”

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